Tax Benefits Of Home Based Businesses

If you are operating a home business, you want to take advantage of those tax deductions that are rightfully yours. Working at home allows you to deduct portions of bills that you are already paying to live there.

Certain home expenses can be deducted if you actually work in your home. It is simpler to do this if you have a room set aside solely for the business. Figure out how large that room is in proportion to the house, and you can deduct some expenses using that percentage.

For instance, if your office space takes up 10% of your house, you can deduct 10% of your heating expenses for the days you work. (If you do not work on weekends, you cannot deduct for weekends.) You can deduct items such as mortgage interest (though not your mortgage itself), electricity, telephone, insurance, and expenses for maintenance and repair. In general, you can deduct the percentage of home expenses that directly relates to the home business.

You can also deduct costs for your internet service provider in proportion to the amount you use the internet for business. If it is used completely for business you can deduct it all, but be certain before you do this that you are not using it for other reasons. Do not forget the other business costs such as office supplies, furniture, software, subscriptions, or other equipment, if these items are used exclusively for your home business.

If your business requires you to leave your home office, you can deduct the cost of mileage, other travel, meals, entertainment, and anything else that goes along with the cost of living on the road. During the year, make sure you keep documentation of your mileage and the cost of lodging, food, etc.

What about the bigger ticket items? When making home business tax deductions, you can also take into consideration insurance premiums (if you are self-employed and pay for your own insurance), the money you put into retirement plans, and half of what you pay towards your social security. And if your children are seventeen or younger and are working for you, you can deduct their salaries as business expenses.

This sketch of tax deductions is of course only a starting point. For more information, be sure to check out the IRS web site and to consult with your tax professional.

Article Source: http://www.onestoparticles.com

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